Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $23,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $320,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $1,000,000 to his nephew Frodo. He can afford to save $2,100 per month for the next 10 years. If he can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires, how much will he have to save each month in Years 11 through 30?
Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with a retirement income of $23,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in Rivendell in 10 years at an estimated cost of $320,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of $1,000,000 to his nephew Frodo. He can afford to save $2,100 per month for the next 10 years. If he can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires, how much will he have to save each month in Years 11 through 30?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Bilbo Baggins wants to save money to meet three
objectives. First, he would like to be able to retire 30 years from now with a retirement
income of $23,000 per month for 20 years, with the first payment received 30 years
and 1 month from now. Second, he would like to purchase a cabin in Rivendell in
10 years at an estimated cost of $320,000. Third, after he passes on at the end of the
20 years of withdrawals, he would like to leave an inheritance of $1,000,000 to his
nephew Frodo. He can afford to save $2,100 per month for the next 10 years. If he
can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires,
how much will he have to save each month in Years 11 through 30?
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